Cash Statment Problem 02 AssetsCashAccounts receivableInventoriesPrepaid expensesInvestments93Plant assetsAccumulated depreciationTotalSINSHARMA INC.Comparative Balance SheetsDecember 31Liabilities and Stockholders' EquityAccounts payableAccrued expenses payableBonds payableCommon stockRetained earningsTotalSalesLess:Cost of goods soldOperating expenses, excludingdepreciationDepreciation expense2010$ 90,80092,800112,500ARMA INC.Income StatementFor the Year Ended December 31, 2010Income taxesInterest experiseLoss on sale of plant assetsNet income28,400138,000270,000(50,000)$682,500$112,00016,500110,000220,000224,000$682,500$135,46012,41046,50027,2804,7307,500InstructionsPrepare a statement of cash flows using the indirect method.2009$ 48,40033,000102,85026,000114,000242,500(52,000)$514,750InstructionsPrepare a statement of cash flows for Arma Inc. using the direct method.$ 67,30017,000150,000175,000105,450$514,750Additional information:1. New plant assets costing $85,000 were purchased for cash during the year.2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash.3. Bonds matured and were paid off at face value for cash.4. A cash dividend of $40,350 was declared and paid during the year.$392,780233,880$158,900*P17-10A Data for Arma Inc. are presented in P17-9A. Further analysis reveals that accountspayable pertain to merchandise creditors.P17-11A The comparative balance sheets for Ramirez Company as of December 31 are pre-sented on the next page.(SO 3)Cash from operations$185,250Prepare a statement of cashflows-direct method.(SO 6)Cash from operations$185,250Prepare a statement of cashflows-indirect method.(SO 3)

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Cash Statment Problem 02

Assets
Cash
Accounts receivable
Inventories
Prepaid expenses
Investments
93
Plant assets
Accumulated depreciation
Total
SINSH
ARMA INC.
Comparative Balance Sheets
December 31
Liabilities and Stockholders' Equity
Accounts payable
Accrued expenses payable
Bonds payable
Common stock
Retained earnings
Total
Sales
Less:
Cost of goods sold
Operating expenses, excluding
depreciation
Depreciation expense
2010
$ 90,800
92,800
112,500
ARMA INC.
Income Statement
For the Year Ended December 31, 2010
Income taxes
Interest experise
Loss on sale of plant assets
Net income
28,400
138,000
270,000
(50,000)
$682,500
$112,000
16,500
110,000
220,000
224,000
$682,500
$135,460
12,410
46,500
27,280
4,730
7,500
Instructions
Prepare a statement of cash flows using the indirect method.
2009
$ 48,400
33,000
102,850
26,000
114,000
242,500
(52,000)
$514,750
Instructions
Prepare a statement of cash flows for Arma Inc. using the direct method.
$ 67,300
17,000
150,000
175,000
105,450
$514,750
Additional information:
1. New plant assets costing $85,000 were purchased for cash during the year.
2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash.
3. Bonds matured and were paid off at face value for cash.
4. A cash dividend of $40,350 was declared and paid during the year.
$392,780
233,880
$158,900
*P17-10A Data for Arma Inc. are presented in P17-9A. Further analysis reveals that accounts
payable pertain to merchandise creditors.
P17-11A The comparative balance sheets for Ramirez Company as of December 31 are pre-
sented on the next page.
(SO 3)
Cash from operations
$185,250
Prepare a statement of cash
flows-direct method.
(SO 6)
Cash from operations
$185,250
Prepare a statement of cash
flows-indirect method.
(SO 3)

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Hi,

1) write up is not so clear!!, I'm unable to distinguish between number 2 & 3 plus some wording is not clear. ( it will be better if the solution was written by computer)

2) The answer is very complecated ....where You added the Income Tax Expense and Intrest Expense .. and then you substracted agian in different cash movments where i really got confused ..

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